The End of the World as We Never Quite Knew It: Apple Acquires

Apple-logoSaturday morning, I made the mistake of sleeping in, and sometime around 7:30 awoke to the news that Apple is acquiring  At least three different people, all well aware of how I've been advocating Lala in recent months as an alternative to iTunes (no more 30 second clips!) sent me links to stories in Hypebot, the NYTimes, and the Wall St. Journal all announcing the same deal. 

"Apple buys smaller technology companies from time to time and we generally do not comment on our purpose or plan." said Apple spokesman Steve Dowling.

Leaving me, along with every body else in the business, to ponder what it all means. 

There are only two possibilities: 

1) Apple really hasn't built any infrastructure for a streaming/subscription service into iTunes, and has chosen instead to acquire that infrastructure rather than develop it in house.  Or… 

2) They're going to shelve the whole thing. 

Lala-logoOver the past few weeks, whenever I've shown somebody the Lala iPhone app (which I have been privileged to be part of their beta program), the question has invariably come around to, "and Apple is going to approve this?"  Because anybody with half a wit can see that a system like Lala has devised pretty well obsolesces the iTunes "30 second samples for 99c downloads" model.  Throws it right under the bus and drives over it half dozen times.  "You can listen to anything you want to, in its entirety, for free" — pretty well redefines (on demand) music distribution. 

It's gratifying in one sense that Apple sees the handwriting on the wall, and recognizes as I've been saying for a while now that the "end zone of digital distribution is the 'Celestial Jukebox' – whatever you want to hear, whenever you want to hear it, wherever you are (if the bastards ever let us)."

I speculated a while back that Google, after announcing Lala's participation in the Google Music search program, would be the company to acquire Lala.  That, I feared, would throw the Celestial Jukebox into the lurch that is now forming between Google and Apple as Google begins to get into some of Apple's business with Android, Chrome, etc.   In that regard, I suspect the Apple acquisition is ultimately the better result. 

With its unsurmountable domination of the digital music delivery business, Apple is in a far better position to make the best of Lala than Google.  What remains to be seen is Apple's time frame.  

When I started talking about Lala (and started this blog) a few months ago, and speculated re: the challenge that streaming presents to iTunes' download model, one friend predicted that Apple would "ride the download model all the way to the bottom." 

At the very least, Apple seems well aware of where that bottom is an is now making the necessary preparations to continue to be a force in digital music delivery once the download model has run its course. 

On the other hand, what Apple's acquisition of Lala empowers Apple to do is to determine the timing of the arrival of that bottom and the new paradigm its arrival heralds.  With Lala in their pocket, it will be almost entirely up to Apple to determine when the download model is over and when the cloud storage and streaming model takes over. 

No predictions here how long Apple is going to milk the downloads.  I'm just glad this means it will all work seamlessly with my other Apple products: Macs, iPhones, AppleTV, and Lord only knows what's next. Somebody, please pass the Kool-Aid.

Worlds Collide: Brooks… & Springsteen


It's not everyday that an ostensibly right-leaning columnist (albeit for the ostensibly  left-leaning New York Times…) waxes eloquent about a populist, progressive rock star, but here's David Brooks doing just that: 

I followed Springsteen into his world. Once again, it wasn’t the explicit characters that mattered most. Springsteen sings about teenage couples out on a desperate lark, workers struggling as the mills close down, and drifters on the wrong side of the law. These stories don’t directly touch my life, and as far as I know he’s never written a song about a middle-age pundit who interviews politicians by day and makes mind-numbingly repetitive school lunches at night.

Last week, my kids attended their first Springsteen concert in Baltimore. At one point, I looked over at my 15-year-old daughter. She had her hands clapped to her cheeks and a look of slack-jawed, joyous astonishment on her face. She couldn’t believe what she was seeing — 10,000 people in a state of utter abandon, with Springsteen surrendering himself to them in the center of the arena.

It begins again.

Yeah I sorta know what he means:



Great Time for “Music” – Not So Much for the “Industry”

Here's a chart that's making the rounds of the Interwebs this week that illustrates as well as anything the shifting paradigm of "music" -v- the "music industry" (i.e. the recording industry.).


This is the graph the record industry doesn’t want you to see.

It shows the fate of the three main pillars of music industry revenue – recorded music, live music, and PRS revenues (royalties collected on behalf of artists when their music is played in public) over the last 5 years.

Hopefully, this analysis – and there’s more on the nuts and bolts of our method below – sheds some factual light on the claims and counter-claims that are paranoically sweeping across the music industry establishment, not least that put forward by the singer Lily Allen in this paper recently – and the BPI – that artists are losing out as a result of the fall in sales of recorded of music.

The most immediate revelation, of course, is that at some point next year revenues from gigs payable to artists will for the first time overtake revenues accrued by labels from sales of recorded music.


OK, so, it doesn't exactly support the argument that the "remunerative value of recorded music is approaching zero," but it does support the widely-held contention that the value in music now is in the "live" experience, and not so much in the recordings.   

And the article that comes with the chart supports the seemingly contradictory business model that you can actually "create value" by giving stuff away.

How Much Is A “Stream” Worth? Maybe Not “Zero,” But Not Much More Than That

From somewhere on the edge of the Cascade Mountains: 

I've been taken to task on occasion for speculating that the cloud-storage and streaming content paradigm (aka "The Celestial Jukebox) reduces "the remunerative value of recorded to music" to something "approaching zero."

Gaga Now comes the news from Sweden – home of the much-hyped, but still not available in the US streaming music service called Spotify – that Lady Gaga was paid a whopping $167 for more than one million plays of her tune "Poker Face:"

Lady Gaga’s “Poker Face” was one of the most popular tracks for 5 months on Spotify; being played more than 1 million times. But according to reports this weekend, the Swedish Performing Rights Society only paid her $167. If true, it confirms other complaints from other artists like those of Swedish musican Magnus Uggla who pulled his music off Spotify declaring, "I'd prefer to be raped by Pirate Bay than played on Spotify".

I just ran the numbers through the calculator on my iPhone (turn it sideways and it can handle those kinds of numbers) and determined that $167 divided by 1-million = $0.000167. I think that equates to 1.67 10,000ths of a dollar, or 1.67 hundredths of cent per play.

After Hypebot released this initial "$167" story, Spotify came back with a rebuttal asserting that they paid Lady Gaga "more than that," but refusing to specify what exactly they did pay.  The follow up story is worth reading because it does illustrate the complexity of these issues.  But Spotify is going to have to demonstrate that what they paid Lady Gaga amounts to something like 1,000 times the reported figure before the return from a stream approximates anything like the expected return from a 99c download.

And therein lies the problem that faces everybody in the industry as the model shifts from downloads to streaming.  

Admittedly, even 1.67-hundredths-of-a-cent is not quite zero, but it sure is close.  

Anyway you slice it, it's hard to fathom how teensy numbers like that support a viable industry for recorded music.  

Pilot Butte – Bend, Oregon

We forged our way thru a ferocious blizzard (OK, it snowed a little) in order to reach the summit (all of 480 feet) of this dormant cinder cone on the outskirts of Bend, Oregon. We’re here for a few days before returning to Portland for Thanksgiving with “The Boys.”

Pilot Butte - Bend, Oregon

A Celestial Jukebox in a Box: Sonos S5 System – And Still No Beatles

It's not exactly "Beatles… Abbey Road… Loud," but a new system offers some intriguing features, and excellent sound quality, even if it's a rather complicated system. David Pogue tries to figure out the Sonos S5: 


The music sounds fantastic. Obviously, there’s not much sense of stereo-channel separation unless you have a very skinny head. But holy cow, the bass, the distinct instruments, the clarity — it’s all there. And with serious power. The higher volume settings are literally ear-splitting indoors. One S5 could fill a very large backyard with sound, and probably a school gym, without distortion or skipping.

This all sounds great, and it is great. But you hecklers in back are no doubt thinking: “Well, duh! Why not just buy a $95 AirPort Express pocket Wi-Fi base station, connect speakers to it and then control playback using Apple’s free Remote app on your iPhone/iPod Touch?”

This is true. That’s a wireless music system for a lot less money. There is, however, a caveat or five: the price doesn’t include speakers. That system doesn’t work when the computer is off or iTunes isn’t running. It doesn’t let you control the volume of each room. It doesn’t let you pipe different music to each room. It’s not nearly as easy to grab by the back-panel handle and carry out to the patio for a party. And the music sometimes drops out because it’s using Wi-Fi instead of Sonos’s much more reliable, stutter-free music signal.


The Sonos system has all kinds of digital sources, like your iTunes library, Rhapsody, Pandora, and Napster.  What's missing is (for me, anyway) is  

And while we're on the subject of the Beatles (we weren't really, but who's counting?) we'll take a minute to note that regardless of what system or technology you're using at home or on the road, you still can't deliver the Fab Four digitally by any means other than ripping your own CDs.  There are still not Beatles in iTunes, no Beatles on Pandora or (I assume) Rhapsody or Napster — there are no digital Beatles (something they have oddly in common with Garth Brooks).  

So we note with interest — and curiosity — that a website that thought it sell Beatles tunes online for 25-cents apiece has been shut down by a court in Los Angeles.  Apparently the purveyor believed he could alter the original recordings with "artistic touches based on a technique he pioneered called "psycho-acoustic simulation."

You really have to wonder what this guy was thinking.  The court wondered, too, and agreed with the attorneys who dismissed the whole ruse as "technobabble and doublespeak."  

Now Playing on the Celestial Jukebox: Diamond’s and Rust – A Forgotten Springsteen Gem?

More preparation for tonight’s big show… 

In a discography that reaches back now more than 30 years, it’s easy for any one album to slip between the cracks of recollection.  Diamonds and Rust is an interesting “in between” record.  It doesn’t have the “wall of sound” of Born to Run, the topical timeliness of The Rising, nor the barren starkness of Nebraska or The River. But it has it’s unique, mostly acoustic quality that makes it as fulfilling as any of The Boss’s higher-profile releases.  It’s worth listening to again: 


Today’s Question: Will Google Acquire

Pacman One wonders what curious machinations lurk behind the partnership that Google has formed with in order to create its new "Google Music Search" service that embeds music players into any Google search that involves music.  

It seems reasonable to speculate that Google might have Lala in its crosshairs as a future acquisition target.  

For starters, Lala founder and CEO Bill Nguyen has a history of some half-dozen high-profile startups that have all cashed out at some point in their growth curve.  There's no reason to believe from his past history that he's got any interest in taking Lala public. 

And then there is Google's own history of acquisitiveness, not the least of which is their $1-billion acquisition of YouTube.  That put Google squarely in the web-video business.  Music on the web is even bigger than video, why would Google not want to be a player in that space?

And of course there is Google's own competitiveness.  There has been much in the news lately about the conflict of interests between Google and another big partner, Apple:  Google provides search and map functions for the iPhone, but Google CEO Eric Schmidt recently resigned from Apple's board of directors due to those apparent conflicts. 

Apples iTunes currently dominates the market for digital delivery, but iTunes has stubbornly stuck with a pay-per-download model, adhering to Apple's CEO's admonition that "people want to own their music" — which is an oddly antiquated notion for so vaunted "thought leader" as Steve Jobs.  

As a friend recently said, "iTunes is going to ride the download model all the way to the bottom."  If that's the case, then Google could take Lala out, add a subscription service, and eat iTunes' for breakfast, lunch, and dinner as music delivery moves from the hard drive to the web. 


I’m NOT The Only One: Passman Thinks Sub Services Are The Future, Too

I don't know if I've ever read Donald Passman's book, All You Need to Know About the Music Business.  I think I might have glanced through it when I first arrived in Nashville in 1994.  The whole business is in such a state of flux right now that trying to compile it all into a book strikes me as aiming a Howitzer at a moving target, but Passman has been re-issuing this book for almost 20 years now and I guess old habits die hard. 

In any event, I'm pleased to see that Mr. Passman thinks well of the future of subscriptions services as the ultimate form of digital music delivery, despite the speed bumps such services have encountered along the way: 

Q: Why do you think subscription-based services (such as Rhapsody) haven't really taken off? 

A: Passman: They're not convenient enough, they're not truly cross-platform. For me, the ultimate would be anytime-anywhere access to any music for one subscription. On my computer, in my car, on a connected device, whether it's an
iPod or something else, on an airplane when I don't have an Internet connection. Not just tied to one or two devices. I'm personally a believer in subscription services. People don't think twice about paying for cable, and when you stop paying it goes away. But with music, there's a kneejerk reaction because we're used to owning it.


Which nicely echoes the point that I've been making all along: Besides the clunky interfaces, the biggest obstacle to more widespread acceptance for music subscriptions services is the persistence of the illusion of "ownership."   

Which, again, is why I'm one of the few who thinks the Google partnership with Lala such a potential game changer.  Yes, I know, Lala is not a flat-fee subscription service (yet?).  But the user interface works exceptionally well — is far superior to Rhapsody or the latest incarnation of Napster (from what I hear).  

So users will find Lala from its new links in Google music searches, discover its ease of use, and become enraptured with the virtually infinite quantities of music they can absorb when they don't have to "own" it to listen to it.  From there it's a short leap from Lala's current "nickel and dime" approach to "just let me pay a flat monthly fee and open the flood gates."

Add an iPhone app (presently in beta) to that scenario and it's pretty much "game over."